Question

According to the efficient market theory, A. prices of actively traded stocks can only be under-valued in an efficient market B. prices of actively traded stocks can be under- or over-valued in an efficient market, and bear searching out C. prices of actively traded stocks can only be over-valued in an efficient market D. prices of actively traded stocks do not differ from their true values in an efficient market

Answer 1

Answer:

The correct answer to the following question will be Option D.

Explanation:

• The theory or hypothesis that even as soon as it arrives, all institutional investors obtain as well as act on most of the necessary information or data. Even if this was purely real, there would have been no stronger investing strategy than just a coin flip.
• As per this principle, the dynamically trading share prices in such a competitive market don't vary from actual measured value or beliefs.

The other choices have no relation to the given circumstance. So choice D is the correct answer to the above.